Housing Prices: Blaming Republicans, the rich, etc, on the way down...
December 28, 2007 09:08 AM
...just like on the way up. Mickey Kaus reminds us of the benefit to the housing "crisis":
Are you impressed with a drop in home values of 6.6% over a year? It doesn't seem like such a big correction, given the dramatic run-up in prices over the last decade or so. ... And don't declining prices make housing more... what's the word? ... affordable?** ... This evening NBC Nightly News billboarded a "housing CRISIS." (Link available here.) I thought a "housing crisis" was when people couldn't find housing, not when it got cheaper. (NBC's expert: "It's very, very difficult to find any silver lining." No it's not.) ...
He's absolutely right. Chez NBS has been on the market since October 1, and hasn't sold yet. But when it does sell, we'll be able to take advantage of a huge drop in prices on houses that are bigger, nicer, and in better neighborhoods than what we first thought we could afford. It has been quite enjoyable to see houses that were once outside of our price range fall within it.
And Mickey reminds us of who got all the blame when housing prices shot up so high in the first place:
During the runup in housing prices the air was filled with complaints from the left that the rich were bidding up the value of housing, which was becoming unaffordable for ordinary Americans whose wages were rising only slowly, etc.. Now that this process is unwinding, much of this affordability problem is presumably being corrected.
Right again. Mrs. NBS and I are constantly astounded when we watch those HGTV "Flip that House" type of shows, and they profile some complete dump in California that lists for $650,000 while still in an unrenovated crack-house-infested-with-feral-cats condition. How can anyone afford to live out there? Especially the working class? How can they possibly save up for a decent down payment?
Now that prices on the coasts are falling so dramatically, maybe people who are just starting out in life will be able to put more than 5% down, and thus won't lose all of their equity during a price slump? And I do feel sorry for the people who are losing their homes, don't get me wrong. But why didn't they know that if you can't put 20% down, you can't afford the house? That's been the rule of thumb for decades.